Retirement, Mayo dropping Medicare, eating & genetics, and farming

An NPR poll found that 25% of retirees think retirement is worse now than it was five year ago.  But, almost half think it’s the same.

The Mayo Clinic has begun dropping Medicare patients.  Some think they’re moving to a concierge clinic arrangement.

You are what you eat: Your eating habits change your genes.

More and more Boomers are retiring to the farm.

A new macular degeneration drug, holiday meltdowns, seniors & poverty, and BPA in canned goods

The FDA has approved a new treatment for macular degeneration.

Avoid a holiday meltdown: Be proactive about your mental health.

The US Census changed the way it ranks poverty; now it looks like more seniors are living in poverty.

Some canned goods leach BPA into the food.  Skip them if you can.

Paying for a CCRC

Most senior housing communities require that potential residents prove their financial ability. This is usually done through an approval process questionnaire which asks about income from pensions or retirement plans, home value, and savings. Communities will also ask about any debt you have and the amount of monthly payments on that debt.

The worksheet helps the community evaluate two things: your annual income and your assets.

Income

Annual income includes social security, pensions, retirement plans, and dividends or bond payments. The worksheet given to you by the community should make it easy to tally all of your income into one number. You might have to subtract out mortgage or other debt payments.

In general, most communities require that your income be at least 1.5 times the monthly fee. For example, if the community’s monthly fee is $2,500, your annual out-of-pocket expense is $30,000. Therefore, you would need at least $45,000 in annual income in order to qualify to live in the community.

Assets

Assets include your house (minus remaining principle on your mortgage) and other investments like stocks, bonds, businesses, royalties, and rental property. The community will require that you note all debt owed on these assets.

Most communities require assets in excess of 1.5 times the entrance fee. For example, if the community charges $200,000 for the apartment of your choice, you would need at least $300,000 in assets (including the value of your home) in order to qualify to live in the community.

How do communities know this is enough money?

They don’t. Changes in the stock market, low investment returns, or unforeseen expenses can cause residents to experience dramatic declines in their net wealth. However, having a cushion of 1.5 times assets and income allows most residents to weather even the toughest of financial storms.

What if I don’t qualify?

It is not uncommon for potential residents to have more assets than income or vice versa. In the case of a resident meeting one criterion by a wide margin but not the other, most communities will make an exception. This is solely at the discretion of the executive director. At the very least, communities will require a cosigner like an adult child or relative who promises to pay the balance of fees should the resident run out of money.

As stated above, income and asset requirements vary between communities. Some communities might have more lax or more stringent requirements. Especially since the recession, look for higher income and asset requirements, and expect some communities to ask for proof via copies of financial statements.

Ten Questions to Ask During your Visit

There are a few things that you absolutely must know about a community that might not be included in the traditional sales routine. Here are the ten must-ask questions:

What is your policy for refunding my entrance fee after I move out or die? How long will my estate have to wait before getting the money back?

Regardless of how much money you have, entrance fees aren’t cheap. It’s in your best interest to understand how the community will process your refund when the time comes. This information is also outlined in the resident contract, which you should read thoroughly before signing.

What is your policy regarding permanent transfer into assisted living or nursing? In the event of a disagreement about my health, how will you decide if I move?

I have read about several residents who have had to sue their community because the community forced them to move to assisted living or nursing without their consent. Communities have an obligation to discuss permanent moves with the resident and the resident’s family, but it is sometimes difficult to reach agreement on when is the appropriate time to move to higher levels of care. You want to know in advance what the community policy is regarding a permanent move and how the community resolves disagreements.

How do you decide increases in monthly fees? Do you cap yearly increases?

By far the biggest complaint from residents has to do with annual fee increases. I have seen some communities that tried to pass large monthly fee increases only to have their residents move out in protest. Although most communities won’t guarantee a maximum annual increase, make sure to ask if the community has any policy regarding increasing fees.

Do you have a resident council? If so, how much authority does your resident council have to make decisions about the future of the community?

Most communities have a resident council that meets on a regular basis to accomplish any number of tasks. The most important of these is usually to discuss the community with members of management. This is especially important during times of renovation or redevelopment when residents might feel displaced by construction crews and want a means of voicing their concerns to the folks in charge.

What is your policy for residents that outlive their assets?

Although CCRC’s often have strict guidelines regarding resident income and assets, there are occasions when residents run out of money. This can be the result of several factors (outliving assets, poor investments, etc). Almost all nonprofit communities have endowments that will pay for residents that run out of money. For profit communities have varying policies.

At a minimum, residents that deplete their assets and income should expect to be moved to the smallest available apartment and to incur reductions in their eventual entrance fee refund.

What is the religious affiliation of the community, if any?

Most nonprofit communities have some sort of religious affiliation. However, in order to attract the largest number of qualified residents, most communities tend to welcome all religions. There will often be an on-campus chapel for worship services and the occasional memorial service.

However, religious affiliation might make a big impact in your daily routines if the community changes its meals to adhere to Kosher guidelines or Lent. There might also be resident activities geared to a specific religion or denomination. Also, since health care will be offered on the campus, expect to see a priest or minister on staff making rounds through the halls. Most communities keep one on staff.

What are you doing to keep the community competitive with other local providers?

Depending on your age, you might plan to live in the community for up to thirty years. In this case, your entrance fee is an investment, just like your home. The community must keep pace with maintenance, interior decorating and furniture, and general appeal. That means that throughout your time at the community, management must continue to maintain and improve the property. Expect to see renovations, expansions, and other changes to the campus that will keep it looking nice for years to come.

What is your pet policy?

This policy matters both for pet people and for people who hate animals; pet policies vary widely by community. Some communities will accept up to two or three small pets. Others do not allow any animals. Even for communities that allow pets, it might be a good idea to ask the community’s policy on dealing with pet owners who can no longer take care of their animals, have too many, or do not do a good job picking up after them.

What sorts of activities do you have?

If you have time, try to meet the social coordinator at the community. You want to make sure that the types of activities the community schedules are things that you would be interested in participating in. Try to attend one of the events if possible. If the events are well-planned and well-executed, then you know that your life at the community will probably be a lot of fun!

Do you have friends or family that live here? If not, why would you recommend that your family member or friend move in here? Would you move in here?

This question will tell you a lot about the sales person and give you some valuable information as to why he/she believes the community is the best. One woman told me that she would never move into her community because of the no pet policy. On the other hand, another sales person told me that her mother and grandmother had lived in the community and had been given exceptional care during times of illness. I had another sales counselor at a different community tell me that she was hoping to save enough money to put her sick husband in the community’s nursing home. The sales people know the campus inside and out. Their feedback, especially when it comes to their personal opinion, is very valuable.

Aging in Place: Friend or Foe?

The term “aging in place” became popular several years ago to describe a particular type of senior housing whereby residents were allowed to remain in their independent living apartments, even though they required higher levels of care.

The main benefit of aging in place is that you don’t have to move if you become sick. Your bedroom remains your bedroom. You don’t have to worry about moving to a smaller assisted living apartment. It is a huge benefit for seniors that might need to make several moves during the last years of their lives. Once they move into the community, their apartment becomes their home.

The main disadvantage of aging in place is that communities have trouble marketing units that turned over (in other words, the units vacated due to resident death). Aging in place is an attractive marketing technique for younger communities that attract younger residents, but it is very difficult for a community that has been open for several years to resell units to younger residents.

Imagine this: You go into a CCRC, and during the tour, you notice health care workers coming in and out of the rooms. In the hallway are seniors that would normally be in a nursing home. They are all sitting in wheelchairs, and most of them are asleep. Would you want to move in here?

When the independent living residents are mixed with the assisted living residents, it makes it hard for the community to sell units to younger seniors. If the community is known as being an aging in place community, then it is probably fine. Most Holiday Retirement Communities, Sunrise, Belmont, and Atria communities (which are not usually CCRC’s) are marketed for independent living and assisted living needs and allow residents to remain in their apartments as long as their needs do not become too acute.

But, if you are considering a CCRC that markets aging in place, make sure the community has some policies that help attract younger residents to fill vacated units. Otherwise, you run the risk that your estate might have a long delay in receiving the refund portion of your entrance fee (while the community tries to resell your unit).

In summary, there is no problem with aging in place. It is a fine idea, and it creates a lot of security for seniors that are worried about being bused from place to place as their needs progress. However, the policy can be detrimental to CCRC’s that are trying to maintain a young, vibrant resident population.

Three Sneaky Sales Tactics and Your Best Defense

Especially in today’s economy, communities are finding it difficult to keep their units filled. You should be prepared for pushy salesmanship when you go into to visit. Here’s what to watch for:

The limited-time offer: If the sales department is desperate to make sales, there is a chance that they might offer you an incentive to make a deposit. These are usually something to the effect of: If you give us a 10% deposit within two months, we’ll give you $10,000 off your apartment. Other incentives include free upgrades, discounted nursing days, and additional services.

If you have already decided to move into senior housing, keep this tactic in mind. Your best bet is to narrow your search to a handful of communities, visit them all within the span of a week, and make your favorite ones compete against one another for your business. Be warned, however, that the sales counselors are usually on good terms with one another. If you mention having another community in mind, the counselor might just call that community’s sales office to compare notes.

The pressure sale: The sales counselor might try to guilt you into moving in by insinuating that you could be a burden on your children or that you will be lonely if you don’t move into their community. The other common argument is that you could have a major health issue and need emergency care, leaving your loved ones to pick up the pieces.

The best defense against this technique is to be honest with yourself and your children about what would happen if you were to become ill. If both you and your children have a plan for how to handle extended illness, then you won’t have to worry about answering questions from a prying sales person. Even if you don’t move into senior housing, you might end up downsizing to a smaller home, getting rid of extra possessions, or buying long term care insurance.

Also, if you are worried about being lonely in your home, consider the benefits of living in a community, but don’t let the sales person make you feel like his or her community is the only way to become more active in social life.

Blasting competitors: It’s not uncommon to hear unprofessional sales people saying disparaging things about competitors in order to dissuade you from visiting the other campuses. It’s always possible that they are telling the truth. But, do your own due diligence. Call the other community and find out the truth. Better yet, visit the community and see for yourself. In most cases, the sales person spreading the rumor is the one that is to blame.

Senior Housing Overview

Although there are several options for retirement living in America today, industry standards include:
  • Active adult living: For seniors age 55+ who require no assistance; active adult living generally consists of age-restricted neighborhoods or apartment complexes where residents might pay an association fee but receive no other services
  • Independent living: For seniors age 62+ who require no assistance; independent living is generally offered in either apartment or cottage settings and generally includes meals, housekeeping, and social events
  • Assisted living: For seniors requiring assistance with activities of daily living
  • Memory support/Dementia care: For seniors with cognitive decline due to advances Alzheimer’s or other disease
  • Skilled nursing: For seniors in the end-stage of life who require care 24 hours a day

CCRC’s

Although there are many different types of senior housing communities, a particularly popular arrangement is called a “continuing care retirement community,” (“CCRC”), which includes the following services:

  • Independent living
  • Assisted living/Memory support (generally combined in one wing)
  • Nursing

These communities range in size from 40 independent living units to over 1,000 independent living units, with the industry averaging approximately 150 independent living units per campus. The target demographic is generally seniors age 75 or older.

CCRC’s generally follow an entrance fee model whereby residents pay an up-front entrance fee ranging from $100,000 to $1,000,000 (depending on the community and the size of the apartment or cottage) and a monthly fee ranging from $1,500 to $5,000. The entrance fee is refunded to the resident or the resident’s estate following death or move-out.

This arrangement is unique for several reasons, the most important of which is that it allows the community to offer discounts on health care and other services. Accordingly, most communities consider an entrance fee contract to be a type of long-term care insurance.

Because of the insurance nature of entrance fee pricing, most retirement communities require prospective residents to provide proof that their financial resources meet required thresholds and that they are in good health (a community accepting a resident in poor health and/or with limited financial resources can be obligated to care for that resident for the rest of his/her lifetime.

What to Expect on Your First Visit

Here’s an idea of what to expect on your first visit to the community:

The marketing representative will meet you in the lobby and will guide you to the marketing office. She will have a brochure for you with information about the community. (Not all marketing representatives are female, but I’m using “she” for the sake of simplicity.)

She will likely ask several questions about your background and interests, your children, and your health. She will do this for two reasons: 1) She wants to build a relationship with you so that she can understand what motivates your to move into senior housing and 2) She wants to figure out what type of apartment to sell to you.

Once she figures out what sort of apartment or cottage you are looking for, she will likely give you a tour of the campus. These tours usually include a handful of different apartments, some likely furnished and some not. The tour will always include the community highlights: dining areas, arts and crafts rooms, library and computer centers, and meeting areas. These are fairly typical, and generally, the sales person will try to both learn more about you in order to “close the sale.”

Following the tour, the sales person will take you back to the marketing office and ask if you have any questions. She will invite you to lunch or dinner. If you express interest in moving forward in the sales process, she will give you a packet of forms to take home with you to fill out. If you don’t sound interested, she will try to get you back to the community for another visit.

Some Tips

Eat the food. There is nothing worse than making a commitment to spend the rest of your life in a particular senior housing community and then realizing that you hate the food. It is common practice for marketing representatives to offer you lunch following your meeting. Take them up on their offer. Also, ask if you can come back and eat lunch with some of the existing residents. There is no better way to learn about the community!

Visit unannounced. It’s one thing to visit a community when they are expecting you. It’s another to see how things function when you’re not expected.

One time I did a market visit to a community that was not expecting me and observed a manager lose her temper with a maintenance man who had forgotten to move a moldy refrigerator from an apartment. The entire conversation happened in the lobby, in full view of anyone who happened to be there. At the time, they had no idea that I was doing a market study. I watched the whole thing, thinking all the while that I would never let my loved ones move into this community.

At another market visit, which I conducted on a rainy afternoon, there was a whole group of angry residents at the front desk complaining about their leaking roofs. Had I not been sitting in the lobby, waiting for the marketing representative, I would never have seen the residents complain.

In doing your research, make sure you come back a few days after your initial visit. Look around. Observe how the community handles unexpected visitors. While you wait for the marketing representative, talk to other residents in the lobby. Ask how they feel about their home and what they wish they would have known about the community before they moved in.

Pay Attention to Details. Use your time at the community to take in all the information that you can about the community. Check out the bathrooms. Are they clean and neat? Observe the general cleanliness of the community. Pay attention to dirt and stains, which may indicate that management does not pay attention to the community’s maintenance issues. Are there residents moving around the community and engaging in activities? Or is everyone in their rooms? The first visit is the time when these impressions are freshest.

Go with your Gut. If you get a bad feeling, leave immediately. You have no obligation to sign a contract, go on a tour, or stay for lunch. If the sales person is pushy or if you don’t like the way the community looks, don’t feel bad about leaving. At the end of the day, you don’t want to live in a place that makes you uncomfortable. Even if all of details seem to make sense, your instincts should be your guide.

Finding a CCRC

When beginning your search for a CCRC, your location makes all the difference. Small towns usually have one or two providers, at most. Larger cities like Dallas, Orlando, San Francisco, or Denver have dozens of options, but even people who have lived in the area all of their lives don’t know where to start.

Here are a few websites that will help you survey your local area:

SeniorHousing.net has search options for seniors including 55+ housing, assisted living, low-income housing, independent living, Alzheimer’s and, continuing care communities. You can search by city. Once you have selected a community, the site gives detailed information, often including photographs and pricing.

Leading Age is the industry trade association for nonprofit senior housing providers. The website offers consumer tips for finding retirement communities and has several other education materials to help consumers make their decision.

Google Maps offers a great interactive map that shows dozens of local providers. For example, search for “retirement community, Denver” to see all retirement communities in Denver. More advanced users can ever customize the map with markers for favorite locations.

Nursing Home Compare is administered by the Centers for Medicare and Medicaid and offers a comprehensive listing of ever licensed nursing home in the United States. You can search by county, city, or ZIP code. The site will return relevant nursing homes and include data on health inspections, nursing home staffing, and quality measures.

Furthermore, there are also some state websites that list all of the CCRC’s in the state. Try doing a Google search for “list of CCRC’s” in your state.

What is LifeCare?

LifeCare is a big selling point for communities that have it. Marketing representatives love to portray LifeCare as the choice for responsible seniors, and this is partially true. There is some reason to think that LifeCare is a responsible choice. But, first, what is LifeCare?

LifeCare is one of three types of health benefits that communities can offer as part of their resident agreement:

Type A (LifeCare): LifeCare guarantees that a resident’s monthly fee will never increase beyond their official independent living fee, no matter what level of care he or she receives. In other words, following a permanent transfer to skilled nursing or assisted living, the resident pays no more than the monthly fee he or she paid in independent living.

Type B (Modified LifeCare): Is a contract where residents are offered a discount on assisted living and nursing services. For example: 10% off of higher levels of care or 10 free annual days of nursing or assisted living.

Type C (Fee for Service): The resident receives no discount for assisted living or nursing services and pays the community’s market price for the service.

In my experience, LifeCare is generally calculated as a $30,000 premium above normal entrance fees. This means that, on average, the community expects residents to consume $30,000 in higher-level care over the years they live in the community. Obviously, some residents will consume more, spending more time in nursing or assisted living. Other residents will be relatively healthy and require only limited stays in higher levels of care.

Although some communities do not offer a choice between LifeCare and a modified or fee for service contract, some communities do allow residents to choose. Here are the main considerations when choosing whether or not to purchase LifeCare:

  1. Long term care insurance. Long term care insurance offers basically the same benefits as LifeCare. If you have a long term care insurance policy, check the benefits and compare them to the LifeCare benefits offered by the community. Some communities will negotiate with residents who hold long term care policies. Others will not negotiate.
  2. Age and health. Because LifeCare is a type of insurance, all LifeCare communities require residents to pass a medical exam. This is usually conducted by the community’s head nurse or certified by your doctor. Approval is based on the community’s opinion as to whether or not you will be healthy long enough for the community to make their money back. Thus, the longer you wait to move into senior housing, the more difficult it will be to pass this physical exam. However, the younger you are when you purchase LifeCare, the lower your return on investment. It is a catch 22. If you have health problems (beyond those that are considered normal for a senior), you might have trouble qualifying. Apply sooner rather than later.

A few additional notes:

  1. Some communities call themselves “LifeCare”, but do not have LifeCare in the traditional sense. It is sometimes used as a marketing technique to indicate the presence of multiple levels of care (independent living, assisted living, memory care, and/or nursing) on the same campus.
  2. LifeCare is a type of insurance, so communities offering it are often regulated by the state department of insurance. Check with your state to see what regulations CCRCs must follow and whether or not your community has filed all of their required documentation in a timely manner. Also, you can file an open records request with the department and receive copies of all of their filings.
  3. Some communities offer gradations on their contracts whereby older seniors pay more to live in the community. This is based on the actuarial estimation of cost to the community. As people continue living longer, more communities will likely switch to this type of contract in order to accurately account for resident longevity and its impact on the community’s bottom line.